Bluewater Acquisition Corp. — Management Reports 2020

Sep 4, 2020

Bluewater Acquisition Corp. Management Discussion and Analysis For the year ended May 31, 2020

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FORM 51-102F1

The following management’s discussion and analysis (“MD&A”) should be read in conjunction with the financial statements of Bluewater Acquisition Corp. (the “Company”) and the notes thereto for the year ended May 31, 2020. Additional information relating to the Company is available on SEDAR at www.sedar.com.

This MD&A was prepared by the management of the Company and was approved by the Board of Directors of the Company on July 17, 2020. All amounts are in Canadian dollars unless otherwise stated.

Forward-Looking Information

Certain information contained in this MD&A constitutes “forward-looking information” within the meaning of Canadian securities legislation. When used in this document, the words “may”, “would”, “could”, “will”, “intend”, “plan”, “propose”, “anticipate”, “believe”, used by any of the Company’s management, are intended to identify forward-looking information. Statements relating to forward-looking information reflect the Company’s forecasts, estimates and expectations, as they relate to the Company’s current views based on their experience and expertise with respect to future events and are subject to certain risks, uncertainties and assumptions. Many factors could cause the Company’s actual results, performance or achievements to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. The Company does not intend, and does not assume any obligation, to update any such factors or to publicly announce the result of any revisions to any of the forward-looking statements contained herein to reflect future results, events or developments unless required by Canadian securities legislation.

Description of the Business

The Company was incorporated on March 9, 2018 under the name “10674419 Canada Corporation” by Articles of Incorporation issued pursuant to the provisions of the Canada Business Corporations Act . The Company removed the private company restrictions in its articles on June 4, 2018, and changed its name to “Bluewater Acquisition Corp.” on July 19, 2018 by Articles of Amendment issued pursuant to the provisions of the Canada Business Corporations Act . The head office and registered office of the Company is located at 1400, 350 7th Avenue SW, Calgary, Alberta T2P 3N9.

The Company became a reporting issuer in the provinces of British Columbia, Alberta and Ontario on August 15, 2018, and issued 4,216,500 common shares for gross proceeds of $421,650 on October 30, 2018 pursuant to an Initial Public Offering (“IPO”) of the Company’s common shares. The common shares were issued under the IPO at a price of $0.10 per common share. The Company’s common shares commenced trading on the TSX Venture Exchange (the “Exchange”) on November 1, 2018 under the symbol BAQ-P.

The Company is a “CPC” under Exchange policies. The only business of the Company is to identify and evaluate assets or businesses with a view to completing a “Qualifying Transaction” under Exchange policies.

Additional funding may be required to complete a Qualifying Transaction. The ability of the Company to fund its potential future operations and commitments is dependent upon the ability of the Company to obtain additional financing.

There is no assurance that the Company will complete or identify a business or asset that warrants a Qualifying Transaction within the time limitations permissible under the policies of the Exchange, at which time the Exchange may suspend or de-list the Company’s common shares from trading.

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Selected Financial Information

The following selected financial data is derived from financial statements of the Company for the year ended May 31, 2020, prepared within acceptable limits of materiality and are in accordance with International Financial Reporting Standards.

Selected Statement of Financial Position Data	As at May 31,2020As at May 31,2019
Net working capitalTotal current assetsTotal current liabilitiesTotal shareholders’ equity
	$ 176,051$ 331,336$ 193,112$ 353,573$ 17,061$ 22,237$ 176,051$ 331,336

Summary of Annual Results

The following table outlines loss and comprehensive loss information for the periods indicated:

	May 31, 2020	May 31, 2019
General and administrative	$155,285	$129,244
Share-based compensation	$-	$ 73,221
Net loss and comprehensive	$155,285	$202,465
loss
Net loss per share	$ (0.02)	$ (0.03)

The Company does not have any operations and will not conduct any business other than the identification and evaluation of business and assets with a view to completing a Qualifying Transaction.

Liquidity, Capital Resources, and Outlook

As at May 31, 2020, the Company had working capital of $176,051 and cash of $187,607. Management believes that it has sufficient cash to meet its ongoing obligations and sufficient further resources to be able to identity, evaluate and complete a Qualifying Transaction.

Off-Balance Sheet Arrangements

There are no off-balance sheet arrangements as at May 31, 2020.

Critical Accounting Estimates and Policies

The Company’s significant accounting policies and the adoption of new accounting policies are disclosed in the audited financial statements of the Company for the period ended May 31, 2020.

Financial Instruments and Other Instruments

The Company’s financial instruments consist of cash and accounts payable and accrued liabilities. It is management’s opinion that the Company is not exposed to significant interest, currency or credit risks arising from these financial instruments and that the fair value of these financial instruments approximates their carrying values, as applicable.

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Disclosure of Outstanding Share Data

As at the date of this MD&A, the following is a description of the outstanding equity securities and convertible securities previously issued by the Company:

Voting or equity securitiesissued and outstandingSecurities convertible orexercisable into voting or equitysecurities – stock options	AuthorizedOutstanding
	Unlimited Common Shares7,716,500 Common SharesUp to 10% of the total equitysecurities outstanding771,650 optionsAgent’s options to acquire up to100,000 common shares inconnectionwith the Initial Public Offering100,000 broker warrants

Risks and Uncertainties

The Company has a limited history of existence. There can be no assurance that a Qualifying Transaction will be completed. Equity or debt financing may be required to complete a Qualifying Transaction. There can be no assurance that the Company will be able to obtain adequate financing to continue. The securities of the Company should be considered a highly speculative investment. The following risk factors should be given special consideration when evaluating an investment in any of the Company’s common shares:

• a) until completion of a Qualifying Transaction, the Company is not permitted to carry on any business other than the identification and evaluation of potential Qualifying Transactions;

• b) the Company has had no business activity and has not acquired any material assets since its incorporation other than cash;

• c) the Company does not have a history of earnings, nor has it paid any dividends and will not generate earnings or pay dividends until at least after the completion of the Qualifying Transaction;

• d) the Company has only limited funds with which to identify and evaluate potential Qualifying Transactions and there can be no assurance that the Company will be able to identify a suitable Qualifying Transaction;

• e) even if a proposed Qualifying Transaction is identified, there can be no assurance that the Company will be able to successfully complete the transaction;

• f) the Qualifying Transaction may be financed all or part by the issuance of additional securities by the Company and this may result in further dilution to the investor, which dilution may be significant and which may also result in a change of control of the Company;

• g) there can be no assurance that an active and liquid market for the common shares will develop and an investor may find it difficult to resell its common shares;

• h) if the Company fails to complete a Qualifying Transaction within 24 months of listing, the Exchange could suspend or delist the common shares of the Company and an interim cease trade order may be issued against the Company’s securities by an applicable securities commission if its common shares are suspended from trading on or delisted from the Exchange or otherwise; and,

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• i) the Company competes with many CPCs that are seeking suitable Qualifying Transactions. In addition, other CPCs may have substantially greater financial and technical resources than the Company.

• j) In March 2020, there was a global outbreak of COVID-19 (Coronavirus), which has had a significant impact on businesses through the restrictions put in place by the Canadian, provincial and municipal governments regarding travel, business operations and isolation/quarantine orders. At this time, it is unknown the extent of the impact the COVID-19 outbreak may have on the Company as this will depend on future developments that are highly uncertain and that cannot be predicted with confidence. These uncertainties arise from the inability to predict the ultimate geographic spread of the disease, and the duration of the outbreak, including the duration of travel restrictions, business closures or disruptions, and quarantine/isolation measures that are currently, or may be put, in place by Canada and other countries to fight the virus. The extent of the impact on the Company is not fully known as at the date of issuance of these financial statements, however, it may delay the completion of a qualifying transaction.

Other Information

The policies of the Exchange prohibit Capital Pool Companies from carrying on formal investor relations activities. Corporate communications and investor inquiries are handled by the directors of the Company. Additional information about the Company is available on SEDAR at www.sedar.com.

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